The TVA Retirement System Board of Directors (Board) held its quarterly meeting June 3, 2020, virtually via WebEx with business conducted through the Board’s Investment, Audit, Retirement and Election committees. All current TVARS Board directors were present: Brian Child, Chair; Michael Belcher; Eric Davis, Samuel DeLay; James Hovious; and Tina Wallace.
This was the first Board meeting for Eric Davis, who was appointed by TVA to the Board on April 1, 2020. Eric replaced Tammy Wilson on the Board, whose departure resulted in a vacancy in the Vice Chair position. Following nominations, the Board elected Sam DeLay to serve as Vice-Chair for the remainder of the current term through December 2020.
Investment Committee Highlights:
TVARS staff and consultants reviewed recent financial market and pension and 401(k) Plan investment performance with a focus on how investments performed during this time of market volatility as a result of the global pandemic.
Aon, the System’s 401(k) Plan consultant, reviewed the 401(k) Plan, including the performance, fees and dollars invested within each fund as of March 31, 2020. 401(k) Plan assets were approximately $2.6 billion, and most managers outperformed their respective benchmark index and median peer group over the previous three-and five-year periods. The overall 401(k) Plan asset value has increased again since March and is estimated to be $2.9 billion at the end of May.
Wilshire Associates, the System’s investment consultant for the pension assets, reviewed performance as of March 31, 2020. Pension assets were approximately $7.0 billion. Pension assets have have increased since March and are estimated to be $7.6 billion at the end of May. Wilshire also addressed the recent market volatility and reiterated that the TVARS pension investments are well diversified and the Board should maintain a long-term perspective with respect to the System’s investment strategy and asset allocation. TVARS continues to have sufficient liquidity for benefit payments and is following the liquidity plan presented to the Investment Committee at a meeting in April.
At the meeting, upon the recommendation of Wilshire and the Investment Committee, the Board approved the selection of Wellington Management, a current TVARS investment manager, to manage a global infrastructure portfolio, which continues to build out the System’s allocation to Public Real Assets within the asset allocation policy approved by the Board in December 2019.
Audit Committee Highlights:
The TVARS staff, along with the System’s external auditor, Crowe LLP, presented the results of the fiscal year 2019 audits of the System and the 401(k) Plan, which were issued in April as a part of the 2019 TVARS Annual Report. Both audits resulted in clean, unqualified opinions by Crowe. The 2019 TVARS Annual Report can be found on the TVARS website. At the meeting, upon the recommendation of the Audit Committee, the Board approved an engagement letter with Crowe LLP to perform the fiscal year 2020 audits.
As part of the Board’s ongoing practice of performing periodic reviews of each of the governance policies, at the meeting, the Board approved amendments to the umbrella Governance Policy, which were initially discussed at the March 2020 meeting. The Board also reviewed with TVARS staff the Board Education Policy, including potential updates to be considered at the next meeting.
Retirement Committee Highlights:
Fidelity Investments presented a report to the Board on the overall health of the 401(k) Plan based on the plan design, participant engagement, and retirement readiness measured by participant savings rates and asset allocation. According to Fidelity, the TVARS 401(k) Plan is one of the strongest retirement plans based on these metrics when compared to all other similar retirement plans for which Fidelity provides recordkeeping services. Following this report, Fidelity also updated the Board on how many participants have utilized the new, limited-time distribution and loan deferral options made available in the 401(k) Plan as a result of the CARES Act.
According to Fidelity, participants in the 401(k) Plan have stayed the course during the recent market volatility with very few making changes to their investment choices while continuing to save for retirement through their contributions. Engagement has increased during this volatile period with an increase of 21 percent in phone calls to Fidelity and an increase of 39 percent in on-line visits to Fidelity NetBenefits.
At the request of the Board, the TVA Employee Benefits staff provided an overview of the disability insurance plans provided by TVA to employees and how they compare to the TVARS disability retirement benefit available to eligible employees. The Board approved amendments to the Actuarial Assumptions in the Appendix to the TVARS Rules and Regulations that capture the changes to the mortality table assumptions previously approved by the Board at the December 2019 meeting and used by the System’s actuary, Mercer Human Resources Consulting, in the TVARS annual actuarial valuation report presented to the Board at the March 2020 meeting.
Election Committee Highlights:
TVARS will accept nominations through Monday, July 6, for a three-year term as an elected member of the TVARS Board. The term runs from Nov. 1, 2020, through Oct. 31, 2023. Any employee who is a TVARS member is eligible to run for election.
For the election this summer, the Board decided on the methods for members to receive the required 25 nominations. Due to many employees working remotely during the COVID-19 pandemic, TVARS will accept nominations by e-mail from an employee’s TVA e-mail account to TVARSBoardNomination@tva.gov with the subject line “TVARS Board Nomination – [insert candidate’s name].” No text is required in the e-mail. TVARS will also continue to accept a written nomination petition from a candidate, the form of which is available on the TVARS website, or by calling 865-632-6357.
In adherence with TVA email usage policy, potential candidates who wish to request on-line nomination support from fellow employees may send a one-time internal email not to exceed 50 persons. Any subsequent emails for nomination support should be below the 20-person threshold.
In addition to 25 nominations, candidates must also submit a Candidate Information Form, available on
the TVARS website, or by calling 865-632-6357. Candidates should submit their form by email
to firstname.lastname@example.org, by fax (865-632-8591), or by mail (TVA Retirement System, 400 W. Summit Hill Drive, WT 8A, Knoxville, TN 37902).
Seventh Director Search Committee Highlights:
The Board reviewed a presentation from the Committee regarding a process to evaluate interested candidates for consideration as the seventh director on the Board. Following discussion, the Board agreed to send out a request for additional details from the forty-three applicants and will work toward the agreed upon schedule to achieve the goal of having the vacancy filled by the December 2020 TVARS Board meeting.
Following the regular meeting business, Sam DeLay presented to the Board for consideration a motion to amend Section 3(2)(a) of the TVARS Rules and Regulations to provide for the election of the seventh director by retirees instead of selection by the other six directors. Following discussion by the Board, the Board voted and the motion failed for a lack of four votes.
Anyone with questions may contact TVARS by e-mail at email@example.com or by phone at 865-632-2672, or 800- 824-3870.